May 2022 Monthly Review

Jordi Visser

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May was another scary month for investors. In early May, the SPX continued its decline from earlier months to reach what would be defined as a bear market, falling 20+% from the highs. The fall reached the low on May 20th before entering a sharp rally into month end. The SPX finished the month flat. However, there was dispersion in performance. The energy sector was up close to 15% while the technology and consumer discretionary sectors were both down. The pressure from rising rates finally lessened as 10-year rates were down for the month for the first time this year. Importantly, 2-year rates had their first monthly decline since July 2021. At the same time, Fed funds expectations for the end of 2022 peaked on May 3rd. The peak in Fed funds rate expectations helped risk assets in the second half of May as investors look toward the inflation data coming out in June and the next Federal Open Market Committee (FOMC) meeting.

 

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